10 Financial Challenges and Saving Solutions

Steals and deals on gas, food, phones and more.

By Mary Rowland from Reader's Digest

7. You signed a two-year contract for a cell phone only to discover that the service in your area is unsatisfactory.

Solution: You’re facing two years of dropped calls or a $150 termination fee to cancel the contract. But a new website — celltradeusa.com — can help you find someone to take over the remainder of your contract.

Click onto this bright red website; the screen is split between “Get Out” and “Get In.” There are advantages on each side: The seller gets out of the long contract and keeps his old number. The buyer gets a shorter-term contract and pays no activation fee.

Once you sign up to sell your contract, you’ll begin receiving e-mails from interested buyers. Pay the $19.99 registration fee and you’ll receive their contact information.
Celltrade does not guarantee that a potential buyer will be approved
by your service provider. The company will check on the creditworthiness of the buyer, just as it did with you.

8. Your credit-card application was denied, and your mortgage rate is higher than your sister’s. Ouch.

Solution: Improve your credit score and save thousands of dollars. These scores determine how much you pay in interest on your mortgage and credit cards, and how much you pay for auto and life insurance and more. Credit scores can even be the deciding factor in whether you get the job you want (some employers think it speaks to character).

The Fair Isaac Corporation was first to develop credit scores to determine how likely you are to be a good credit risk. A chart at myfico.com lists mortgage interest rates, updated daily, and shows what interest rate you might get, based on your score. For example, someone with a score of 760-850 could get a 6.31 percent interest rate on a 30-year fixed mortgage of $216,000, according to the site. His monthly payment would be $1,338. For the same mortgage, someone with a score of 620-639 would get a 7.89 percent interest rate and pay $1,569 per month. That’s a difference of $231 a month, or $83,160 over the life of the 30-year loan.

To determine your score, computers grind up a ton of information about your credit history — and spit out a number. FICO scores range from 300 to 850; a score of 720 or more is considered good by most standards; above 760 gets you the best rates — and the right to negotiate even better ones with some lenders. The fastest way to improve your score is to pay your bills on time and reduce the amount of debt you carry.

Go to annualcreditreport.com for your free report — you’re entitled to one every 12 months from each of the three bureaus. You’ll pay extra for your credit score.

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